Republican lawmakers will overturn a key piece of the Affordable Care Act in their tax overhaul, a victory in a long GOP campaign against the health law.

Senate Majority Leader Mitch McConnell said the compromise tax bill from House and Senate negotiators will end the health law’s requirement that many individuals buy a minimum amount of health coverage insurance or pay a fine. Doing so could jeopardize the individual major medical insurance market, and the ACA public exchange system, by reducing the number of healthier people who sign up for insurance, insurers and health policy groups say.

The bill will also include a two-year tax break for individuals with high medical expenses, according to two senior congressional aides who described the provision on condition of anonymity. The provision lowers the amount people have to spend on health costs before they can deduct those costs, to 7.5% of their income, from 10% under current law.

(Related: Senate Passes Tax Bill That Includes Scott Life Amendments)

The House had proposed eliminating the medical costs deduction, as a way of raising revenue for other tax cuts. Its expansion was pushed for by Senator Susan Collins, the Maine Republican whose vote is crucial to passing the tax package.

McConnell’s Statement

H.R. 1, the Tax Cuts and Jobs Act bill. will “repeal Obamacare’s individual mandate tax, delivering relief to low-and middle-income Americans who have struggled under an unpopular and unworkable law,” McConnell, a Kentucky Republican, said in an emailed statement.

The new tax legislation must still be approved by both houses of Congress. Republicans hold a narrow 52-48 majority in the Senate, which will be further diminished when Alabama Democrat Doug Jones takes his seat.

McConnell said yesterday that Jones will be seated in January.

Sen. John McCain (Photo: Senate)

Sen. John McCain, R-Ariz. (Photo: Senate)

Undoing the ACA individual major medical mandate was one of a handful of specific changes McConnell mentioned in his statement. He also said the bill would lead to “further developing Alaska’s oil and gas potential,” a likely reference to opening the Arctic National Wildlife Refuge to drilling.

Opening the refuge to the energy industry is an attempt to ensure the compromise bill has enough votes to pass. Alaska Republican Senator Lisa Murkowski has previously opposed efforts to repeal the Affordable Care Act but she’s long pushed for Arctic drilling.

More Work Ahead

The status of other health provisions in the compromise bill remains unclear. The House’s tax measure ended a tax break for individuals with high medical expenses, while the Senate version made it more generous.

Congressman Kevin Brady, the Texas Republican who leads the House’s Ways and Means Committee, said lawmakers haven’t finished the package.

“We have more important work ahead of us to finalize this legislation,” he said in prepared remarks. “This is our once-in-a-generation opportunity to deliver historic tax reform that we -– and the American people -– can all be proud of.”

Health insurers and hospitals have opposed repealing the individual mandate, because doing so would likely increase the number of uninsured and destabilize insurance markets. For insurers, that could mean financial struggles or fewer customers. For hospitals, it could mean more people who get care without paying for it.

The Congressional Budget Office has estimated that 13 million people would be left without coverage by 2027 if the individual mandate is repealed. While the market for individual health plans would probably remain stable in most of the country, average premiums would rise roughly 10%, CBO said.

Separately, House Republicans have proposed delaying a number of other taxes tied to the Affordable Care Act. Those efforts won’t be included in the main tax bill, but could be added to year-end spending legislation.

McCain’s Health Poses Question on Senate Vote

One major question for Republican supporters of the tax bill is how easily they can round up the 52nd vote.

Republican Sen. John McCain is away from the Capitol indefinitely while he undergoes medical treatment for “normal side effects” of his ongoing cancer treatment, his office says, a development that has potential to interfere with Republican leaders’ plans to approve their final tax legislation as early as Monday.

McCain, who has missed Senate votes since Monday, is receiving care at Walter Reed Medical Center in Maryland, according to the statement. He was diagnosed with a form of brain cancer in July.

“Senator McCain looks forward to returning to work as soon as possible,” said the statement. His office declined to comment further.

Republicans in both chambers are still hammering out the details of a compromise $1.4 trillion tax-cut measure, and their drive to move it through Congress by year’s end could need McCain’s support. In the Senate, Republicans can only lose two votes under their narrow majority to approve the measure, which all Democrats oppose.

Sen. Bob Corker of Tennessee was the only Republican to oppose an initial version of the bill because he said it would increase U.S. budget deficits too much. While he says he’s undecided on a final bill, negotiators haven’t added anything geared toward addressing his concerns. GOP Sen. Susan Collins of Maine says she’s waiting to decide if she will back the final version.

McCain has supported the tax legislation. In July, he was the final “no” vote that dashed a GOP-only effort to change the Affordable Care Act.

—Read 10 Big Tax Expenditures and How They’ve Changed on ThinkAdvisor.


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